Why aren’t rich people happier than those with less money?
We think money will bring happiness, but research in the area of positive psychology has consistently found that having more money does NOT make us happier. Find out how to spend your money the right way so that it really can bring happiness into your life.
Affective Forecasting Error
The reason we don’t spend our money the right way is what Dan Gilbert has described as an “affective forecasting” error that our “mental simulation mechanism” makes. That is, when we think about the future we aren’t usually right about what will make us happy because we don’t think about two things:
- Adaptation – we adapt rather quickly to the things we buy (TVs, computer, etc.). The initial excitement wears off much quicker than we anticipate it will.
- Context – we don’t pay attention to the context of our lives at that future state. In other words, we focus on that new car or that new TV, but we don’t think about the bills that go along with it.
Resources on Money and Happiness
- The fragile American Dream: Insights from the economics of happiness
- Dunn, E. W., Gilbert D. T., & Wilson T. D. (2011). If money doesn’t make you happy then you probably aren’t spending it right. Journal of Consumer Psychology. 21(2), 115-125.
- Van Boven, L., & Gilovich, T. (2003). To do or to have: That is the question. Journal of Personality and Social Psychology, 85, 1193-1202.